Working Paper: CEPR ID: DP4439
Authors: Joseph Francois; Dean Spinanger
Abstract: This Paper is concerned with the interaction of regulated efficiency and World Trade Organization (WTO) accession and its impact on China?s motor vehicle sector. The analysis is conducted using a 23-sector/25-region computable general equilibrium model. Regulatory reform and internal restructuring are found to be critical. Restructuring is represented by a cost reduction following from consolidation and rationalization that moves costs toward global norms. Without restructuring, WTO accession means a surge of final imports, though imports of parts could well fall as production moves offshore. With restructuring, however, the final assembly industry can be made competitive by world standards, with a strengthened position for the industry.
Keywords: automobile sector; China; accession to WTO
JEL Codes: F13; F14; F17
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| WTO accession (F13) | competitiveness of China's motor vehicle sector (L62) |
| regulatory reform and internal restructuring (L51) | competitiveness of China's motor vehicle sector (L62) |
| restructuring (L16) | cost reductions (D61) |
| WTO accession (F13) | surge in imports (F10) |
| restructuring (L16) | competitiveness of final assembly industry (L63) |
| WTO accession (F13) | decrease in parts imports (F69) |